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Sirrr,
where from earth $120 contribution has come from It made freak out and examiner has explained nothing about it
It was $40 when price was $200 price became $280 fair enough where is the contribution????
And lastly how to deal with the redundancy and contribution lost figures I understand that they reduced the cashflows by these amounts so should I reduce my cashflows which I calculated for NPV analysis by these amounts and calculate new NPV to see their effect???
If the price is increased by 80, and the costs do not change, then the contribution increases by 80 as well (to 120). The examiner did not need to explain that.
The examiners answer does deal with the redundancy costs. As he has written in his answer, they will reduce the NPV by approximately $0.1M.
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